When the US Presidential campaign started, the general belief was that if President Barack Obama managed to get the unemployment rate in the US below eight per cent, he would be re-elected – a rule of thumb from previous elections. As Table 1 shows, from near 10 per cent over a year ago, the unemployment rate is just under eight per cent today – and Obama was re-elected. Nor is this purely from government jobs; as Table 2 shows, Obama managed to get the private sector to step up hiring in the months of the long presidential campaign.
Table 2, however, complicates this assessment. The average unemployment rate (not adjusted for population) in states that voted for Obama moved in exactly the same way over time as the average for states that voted for Romney – except that, while they started from identical positions, the Republican states’ average unemployment rate is below the Democrat states’.
Meanwhile the US, as Table 4 shows, has largely managed to avoid a double-dip recession, with quarterly GDP growth staying steadily around or above two per cent per annum from early in Obama’s term.(Click here for tables)
However, Obama’s growth-pushing has come at a cost to macro stability. Table 5 shows the US budget deficit as a percentage of GDP. Bill Clinton left George W Bush a budget surplus which Bush squandered on tax cuts and wars. The 2008 crisis saw the deficit increase sharply, and Obama has not been able to bring it back to a less dangerous level. Meanwhile public debt, in Table 6, has climbed to greater than 100 per cent of GDP – reminiscent of Europe’s worst-off, most unstable economies. The current account deficit is now running at three per cent of GDP, as Table 7 shows, but the trade balance has steadily deteriorated since the crisis. In any other country, these numbers might be considered unsustainable
